טוויטר אמנם רווחית עכשיו ויש לה יותר מ $6,200,000,000 במזומן והשקעות לטווח קצר . אני עדיין מדרג את TWTR בהמלצת מכירה במשך יותר מעשור עכשיו, טוויטר נשאר הרבה מאחורי פייסבוק וגוגל כשמדובר בפרסום. כישלון מתמשך של טוויטר להגיע לחמישיה הראשונה בפירסום דיגטלי שכנע אותי שזה חדל להיות מניות צמיחה שלה. מכירת tweets של המשתמשים שלה לחברות צד שלישי לא הולך להיות מנוע צמיחה עיקרי של טוויטר. משקיעים רבים איבדו את העניין בחברה. האלגוריתם של I Know First שם את טוויטר בהחזק בטווח הבינוני קצר.
The persistent failure of Twitter (TWTR) to match the advertising growth of Facebook (FB) makes it a sell. I am aware that Twitter is now profitable and has more than $6 billion in cash & short-term investments. However, eMarketer’s 2019 estimate that Twitter will earn less than $2.8 billion in advertising this year convinced me that it is high time to unload your TWTR position.
The long-term investment quality of Twitter is not good. Verizon’s (VZ) Oath (former Yahoo) is making double the ad revenue of Twitter. Even Microsoft (MSFT) and Amazon (AMZN) are much bigger advertising service provider than Twitter.
My takeaway is that is better to do some profit-taking on TWTR right now. Twitter’s stock is clearly overvalued when compared to market leaders like Facebook and Alphabet (GOOGL). Twitter’s 3-year average revenue CAGR is 11.11%. This is less than 1/3 of Facebook’s 3-year revenue CAGR. Sad but true, Twitter’s growth story is slow and boring.
(Source: Seeking Alpha)
On the other hand, TWTR now touts much higher EV/EBITDA than FB and GOOGL. Refer to the chart below. TWTR has a 28.07x EV/EBITDA – almost double that of FB’s. This overvaluation of Twitter should eventually get corrected by the stock market. Many investors and sell-side speculators will eventually realize that TWTR deserves a lower valuation considering it’s a laggard in advertising industry.
(Source: Seeking Alpha)
The digital advertising industry is expected to have a market size of $517.51 billion by 2023. My fearless forecast is that five years from now Twitter will still fail to generate $5 billion in annual ad revenue. I am afraid that Facebook’s Instagram will outpace the advertising growth of Twitter.
There Are Better Growth Stocks Than Twitter
My recommendation is sell TWTR and use the money to go long (or buy more) FB and GOOGL. These two giants are already the undisputed leaders in digital/mobile advertising. My fearless forecast is that Twitter will remain a minor platform for web/mobile ads.
As of October 2018, Twitter only has 326 million monthly active users, and 100 million daily active users. Instagram already has more than 1 billion monthly active users and 500 million daily active users. Twitter, an older social messaging platform, has been eclipsed by Instagram and WhatsApp.
Going forward, Twitter will become less and less attractive to marketers and companies wanting to connect with customers. The much smaller number of active users makes Twitter less and less attractive to advertisers.
Data Licensing Business Is Too Small
Twitter has little chance of becoming a $5 billion/year ad company. Worse, its data licensing business is also not big enough, growing fast enough to offset Twitter’s stagnating ad business. As of last year, Twitter’s data licensing business was only a $425 million/year venture.
There is also little chance that Twitter can grow its data licensing segment to a $1 billion/year concern within the next three years. Selling the data mined from tweets is not going to attract many buyers. Tweets are already accessible for free. Any third-party company with enough data-mining resources can freely gather, collate, and analyze tweets.
Aside from its current overvaluation against its much larger peers, Twitter’s huge $6.2 billion cash hoard is also disheartening. This money could have been used to diversify its business. This large idle cash is a clue that Twitter’s management is scared of branching out to other business opportunities.
Twitter could have ventured into digital wallets and e-commerce more aggressively. These two industries could have helped Twitter offset its growing but still small market share in global ad spending. I rate TWTR as a sell because its current management is too timid.
Twitter’s stock bores the stock-picking AI of I Know First. TWTR has neutral algorithmic forecast scores from I Know First. It is best to just cash out on TWTR and use the proceeds to go long FB, GOOGL, or MSFT.
I Know First Algorithm Heat-map Explanation
The I Know First algorithm identifies waves in the stock market to forecast its trajectory. Every day the algorithm analyzes raw data to generate an updated forecast for each market. Each forecast includes 2 indicators: signal and predictability.
The signal represents the predicted movement and direction, be it an increase or decrease, for each particular asset; not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price.
The predictability is the historical correlation between the past algorithmic predictions and the actual market movement for each particular asset. The algorithm then averages the results of all the historical predictions, while giving more weight to more recent performances.